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Energy Transitions – Understanding the Challenge1 MARCH 2016BY ENERGYXPODCASTS

What will it really take to make a transition to a sustainable energy society? Visions of a clean, affordable, reliable, and durable energy future are something that most everyone can support in general. Buthow we get there, and when, are different matters altogether. What fundamental issues do we need to understand, and what forceswill drive or hinder that transition?

In a finite world, sustainability is ultimately not a choice but a mandate. The question is: how fast or slow, smooth or turbulent, thetransition will be. Some say we need to move as quickly as possible—whether for environmental, economic, or national securityreasons, or all the above—implying that all we lack is the political will. Others downplay the urgency and focus on the monumentaldifficulties of making a transition. The truth, it seems, lies somewhere in between.

To move forward, we need to resolve, or at least manage, the tension between these opposing views. On today’s show, we’llexplore that tension and take a “big-picture” look at the risks, challenges, and opportunities that humanity faces in making anenergy transition.

Guests:

Scott W. Tinker – director, Bureau of Economic Geology, and professor, Jackson School of Geosciences, University ofTexas at Austin; chief advisor, Switch Energy Film and Education Project

00:00 04:32

Energy Transitions - Understanding the Challenge - The Energy Xchange

https://energyx.org/energy-transitions/[4/27/2016 4:08:38 PM]

Steven E. Koonin– director, Center for Urban Science & Progress, New York University; former undersecretary for science,U.S. Department of Energy

Jesse H. Ausubel – director and senior research associate, Program for the Human Environment, The RockefellerUniversity; science advisor, Alfred P. Sloan Foundation

Key Questions:

What are the most important factors (opportunities, constraints, risks, benefits) that will drive or hinder a global transitionto a sustainable energy economy? What realities are most important for decision-makers to understand in both defining thechallenge and charting courses of action?

Timeframe: What factors will most influence the timeline for such a transition?

Science + Technology: What key physical and technical factors will drive or constrain the scale and speed of a transition?How important are these factors relative to other factors?

Economics: What are the key economic factors that will drive or constrain a transition?

Behavioral/Political: What are the behavioral and political obstacles and opportunities to accelerate an energy transition?How do they interact with technical and economic factors?

Transcript:

Jan Mueller:

This is The Energy Exchange, conversations about how energy connects to the economy, national security, and sustainability,helping you to understand a changing world. Thanks for joining us. I’m Jan Mueller.

On today’s show, what will it really take to make a transition to a sustainable energy society? Visions of a clean, affordable,reliable, and durable energy future are something that most everyone can support in general, but how we get there, and when, aredifferent matters altogether.

What fundamental issues do we need to understand, and what forces will drive or hinder that transition? In a finite world,sustainability is ultimately not a choice, but a mandate. The question is, how fast or slow, smooth or turbulent, the transition willbe. Some say we need to move as quickly as possible, whether for environmental, economic, or national security reasons, or all ofthe above, implying that all we lack is the political will. Others downplay the urgency, focus on the monumental difficulties ofmaking a transition. The truth, it seems, lies somewhere in between.

To move forward, we need to resolve, or at least manage, the tension between these opposing views. On today’s show, we’llexplore that tension, and take a big picture look at the risks, challenges, and opportunities that humanity faces in making an energytransition.

With me to address these issues, we have three outstanding guests that I’m very pleased to have on the show today.

Scott Tinker is the director the Bureau of Economic Geology and a professor in the Jackson School of Geosciences at theUniversity of Texas at Austin, and a chief advisor with the Switch Energy Film and Education Project.

Energy Transitions - Understanding the Challenge - The Energy Xchange

https://energyx.org/energy-transitions/[4/27/2016 4:08:38 PM]

Steven Koonin is the Director for the Center for Urban Science and Progress at New York University, and also a formerUndersecretary for Science at the US Department of Energy.

Jesse Ausubel is the Director and Senior Research Associate at the Program for the Human Environment at The RockefellerUniversity, and also a science advisor with the Alfred P. Sloan Foundation.

We have Scott, who is a geologist, and Steve, who is a physicist, and Jesse, an ecologist and environmental scientist. All of youare featured in a 2012 film called Switch, which as the name implies, is all about this very issue of making an energy transition.Scott plays the role of traveling host, and Steve and Jesse are amongst several experts who contributed to the film. Scott, if youwould, tell us a little bit about the film, and the project, and what you and director Harry Lynch were aiming to accomplish, andwas there a theme or message that you arrived at after making the film?

Scott Tinker:

Sure. Thanks, Jan, and I’m glad to be here with Steve and Jesse. Harry and I decided to set out and make an objective balance filmthat looked at global energy. We didn’t think something like that was really out there. We interviewed over 50 experts, and Steveand Jesse were prominent amongst those. Over 20 site visits, the best sites in the world, 11 countries, and we agreed that we wouldfeature energy in the film. We weren’t going to put somebody against somebody else to try to make somebody look smart andsomebody look dumb, and we weren’t going to pick one energy winner over another. We were going to go to the best places andshow energy in its best light, and in doing so, look at some of the challenges and the pros of each form of energy.

We think we accomplished that pretty well. We are in over 700 universities and schools now, and past 10 million viewers, soSwitch continues to roll along. It was a remarkable experience. It’s been a lot of fun, and I think it has helped us set an objectivebalanced conversation that goes on.

As we worked our way through it, we looked at the foundational energies of coal for making electricity, and oil for transportation,and those remain prominent in the energy world. We looked at some of the alternatives to those, and there are very many goodoptions, but there are challenges with those as well.

We came back and said, “What can really scale and meet some of the environmental challenges as well?” Without prescribing, wedid conclude that nuclear and natural gas certainly have a large role to play globally, as that transition begins to happen. That’show the film played out, and again, I look forward to this conversation with Jesse and Steve. I think it’s a very important one.

Jan Mueller:

The one takeaway that I had after watching the film, Scott, was there are reasons that fossil fuels dominate our energy mix, andhave for a long time, and how they’ve been the foundation for the modern economy, and our 150 years of prosperity since theIndustrial Revolution began. I’d love to hear all of your takes on what’s unique about fossil fuels, and how making the transition tosomething else, there may not be something exactly like what we’ve experienced thus far in terms of energy and fossil fuels.

Scott Tinker:

Yeah. I’ll certainly start and be very brief. I tend to think of energy security with four pillars. Is it affordable, is it available, is itreliable, and is it sustainable? There are components to each of those with no energy meeting all of them. The reason that coal hasbeen so important and remains so, it is affordable, it is available, and it is reliable, and that’s why we continue to use it globally,and it’s helping to lift many undeveloped and developing nations out of poverty.

Energy Transitions - Understanding the Challenge - The Energy Xchange

https://energyx.org/energy-transitions/[4/27/2016 4:08:38 PM]

Oil, in many ways, is the same thing. It’s certainly available. There’s a large oil resource. It’s reliable, remarkable fuel, dense, andpowers machines with very little residue or emission other than C02, and very difficult to replace as a result of that. It’s affordabletoday. Here we sit in 2016 with oil priced down two thirds from what it was not long ago, but it certainly has a volatile price, andthat introduces all sorts of challenges as you look globally. Again, for transportation and electricity, these are and were the big two.

Steve Koonin:

This is Steve. Maybe as the physicist, it’s appropriate to invoke just physical properties. The energy density of fossil fuels andparticularly oil is astounding. When you’re pumping gasoline at the pump, you’re wielding about 15 megawatts of power. Youshould compare that with perhaps 50 kilowatts of power that you would put into an electric vehicle by charging it up. The energydensity for transportation is particularly important as we think about fossil fuels.

Scott Tinker:

Steve, you said 50 kilowatts and 15 megawatts.

Steve Koonin:

That’s correct.

Scott Tinker:

For people who don’t think in those terms, that’s a multiple of what?

Steve Koonin:

That’s a multiple of about 200 and something. Okay? The electric car is more efficient, but nevertheless not 200 times moreefficient.

Jan Mueller:

If I can mention this, Steve, you used to work for BP before you were with the Department of Energy.

Steve Koonin:

Yes, I was for five years the chief scientist for the oil company BP, and was there to help them think about and move towardalternative and renewable energy sources.

Jan Mueller:

That sounds like an interesting position to be in. How did that go?

Steve Koonin:

It was very interesting. One of the takeaways for me, I had spent 30 years in academia before moving into the private sector for awhile. I think for anyone who really wants to understand energy as a scholar, or as a citizen, that private sector perspective isextraordinarily important. 90% of the US energy sector is in private hands, and that means it’s about profit. It’s about regulation.It’s about betting very large sums of money on multi-decade time scales, and unless you understand that perspective, it’s verydifficult to imagine getting industry to move.

Jan Mueller:

Energy Transitions - Understanding the Challenge - The Energy Xchange

https://energyx.org/energy-transitions/[4/27/2016 4:08:38 PM]

Understood. Jesse Ausubel, you look at energy through the lens of ecological systems, and also you’ve talked about the footprint ofour energy system, and how the next energy system needs to have a smaller footprint as opposed to a larger footprint. Give usyour perspective on where we’ve been in terms of both fossil fuels, in terms of their environmental impacts, and where we need togo moving forward.

Jesse Ausubel:

Thanks Jan. Let me give a very basic point of view from life sciences. We need to think of the energy system as a continuouslyevolving system. Our theme is energy transitions, and in fact, the energy system is always in transition. It’s always evolving. Oneneeds to see it, in that sense, really as a kind of living organism. The wood and hay were the lead sources of primary energy until1800, 1830. Then coal came along, and was the lead source for 100 years, and then oil came along and became the leader in about1920, 1930, and now natural gas is becoming the lead source. That’s just on the supply side.

Then of course, there’s our reusing heat. About 125 years ago, Edison came along and electricity came into the game. There are thedifferent ways you can use energy, and there are all the end use devices, and these are always changing. We fed hay to horses.Then we feed oil to cars. Maybe we’ll feed electricity to Maglev trains in the future. The system is continuously evolving, a fewpercent per year. It’s a very big system, as Steve and Scott have suggested. The idea of revolutions, I think, is usually mistaken,because when you have very large objects, they tend to change gradually, and that’s what the energy system has been doing for10,000 years. We’ve documented a lot of that over the last 300 years.

There’s been a gradual decarbonization of the system, with the shift from the most carbon intensive fuels, namely wood andbiomass, to coal, to oil, to gas. All of these are hydrocarbons, a blend of carbon and hydrogen. We have been moving graduallyfrom the system relying on carbon to a system where hydrogen, the lighter and cleaner element, is the source. There’s reallynothing exceptional about the year 2016, and we are living with this living, evolving energy system.

Jan Mueller:

You say nothing’s special about 2016, but looking backwards, we went from oil to natural gas. Natural gas wasn’t liquid, but itwas a pretty nice thing. The energy density wasn’t as great, but we kept finding oil, so we kept adding these new sources that werestill pretty awesome. We kept coal and we kept oil. Now to keep growing the energy supply, we’re having to find unconventionalfuels and we’re adding … Renewables are not replacing fossil fuels at this point. They’re just adding to supply, and they’re notquite as useful, so what do all three of you think… Is there anything special about where we are right now? Are we at some kind ofthreshold? Are things changing? Are we in a different reality?

Jesse Ausubel:

I would say renewables were here before. People used water, and every river and stream in France was dammed by the year 1400,1450, and destroyed most of the life in the rivers, the fish and so forth. Of course, sailors used wind and so forth. Peopleabandoned renewables, so-called renewables, because they were unreliable, and they didn’t scale up well. But they’re not new,they’re old, and it’s also important to realize that renewables, in many cases, are exhaustible. Wood, for example, is much moreexhaustible than coal or oil. The non-renewables are incredibly abundant, which is part of the reason that we have the debates wenow have. The question is not, is there enough oil, or is there enough gas. The debate is, are the side effects of using very largeamounts of coal, or oil, or gas with present technologies, are the side effects unacceptable? I think the vocabulary of renewable andnonrenewable often confuses us.

Steve Koonin:

Energy Transitions - Understanding the Challenge - The Energy Xchange

https://energyx.org/energy-transitions/[4/27/2016 4:08:38 PM]

There are some externalities, if you like, that are changing and make the present decade and the next couple of decades moreunusual than previous decades. One is the accelerating development and hence demand for energy from most of the world. In thedeveloped world, such as the US, other OECD countries, energy demand is really quite stable, growing very modestly, but youhave surging energy demand due to development for the other six billion people on the planet. That’s one.

The second is that technology is evolving rapidly, particularly information technologies, but also materials, and we can see thatthere are different ways of creating, storing, transmitting, using energy than we might not have imagined 30 or 40 years ago.

The third thing is that we can start to imagine and in some cases see human influences on the environment as a result of our energyuse. I think all of those together conspire to make this and the next decade or two somewhat unusual in the history of the energysystem.

Scott Tinker:

I would add to those excellent points a couple thoughts. Population matters. It is growing at a rate of about a billion people every15 years or so. We’re adding to the planet. That is forecast to plateau mid-century, around 10 or 11 billion people. The benefit ofenergy to humanity can’t be underestimated. It lifts humanity from poverty, access to affordable, available, reliable energy.

It also does other things. It allows you to have clothing, and shelter, and light, and be able to start to read and get educated, whichleads towards other benefits such as better health systems, lower population growth rates, and other kinds of things that are oftennot fully described when we’re thinking about the benefits of energy. Today, in the world, 85% of the energy in the world comesfrom oil, natural gas, and coal.

Ironically, perhaps, those trends, just in percentage terms, not in actual units of use, because those are all increasing withpopulation, just in percentage terms, oil has been coming down. It peaked in 1979, just under 50% of the total energy mix. It’sdown in the low 30s today, and continues to decrease. Natural gas has remained essentially flat for the last 25 years, around 23 or24%. The irony is coal, around 28% 25 years ago. It’s around 31% of the mix today. It actually was dipping, but it has increased,and again, the reason for that is it provides electrons to developing nations that are needed for the benefits that I just described.That is a great challenge.

Infrastructure was mentioned. China sold five million cars a decade ago. Last year, well over 20 million cars. That’s more than theUS, so they’ve gone from a third of the US to 1.3 or 5 times the US in a decade. These cars will be on the road a long time.They’re mostly gasoline and diesel. Coal power plants last 60, 70, 80 years, et cetera, large scale infrastructure. The challenge isreally how to make better environmentally and in other ways, the energy systems that we have, which have done and arecontinuing to do many good things for humanity.

The other piece of that is, and I’ll talk about this in simple terms, affordable, available, reliable energy is good for economies.Healthy economies, in very simple terms, allow for investment in lots of things, and one of those is the environment. I talk oftenabout the three E waltz, the waltz between energy, the environment, and the economy, and truly do fundamentally believe thatthose have to stay in some sort of a balance. Physical environments often are not well treated when you have a very unhealthyeconomy, so this is a balance that we have to always think about, and I think Steve in his roles in DOE, and Jesse, and a lot of thebrilliant things he’s written through the years have dealt with this and made some really, I think, fundamental suggestions abouthow it would move forward.

Jesse Ausubel:

We’ve spoken mostly about the supply side, and Steve and Scott have hinted that we need to expect a lot more demand growth, butI think we need to think very hard about that. The overall efficiency of the system remains very low, and there are fresh

Energy Transitions - Understanding the Challenge - The Energy Xchange

https://energyx.org/energy-transitions/[4/27/2016 4:08:38 PM]

opportunities to create more efficient systems. One of my favorite examples is what’s happening with cars, car sharing, smart cars,self-driving cars. The average car in the US or anywhere in the world is used less than an hour a day, and there are a lot of them.We may need many fewer vehicles in the future.

If the future model is much more car sharing, I’ll say self-driving, Google, or Uber cars that are used, let’s say, just five or sixhours a day, then we’ll need … We won’t need 20 million new cars. We’ll need less steel. We’ll need less oil. We’ll need lessrubber. The cars can be metabolized faster and replaced each year by more efficient ones. People no longer get lost because ofGPS, so all the gas that’s been wasted on people being lost can be eliminated. There are lots of opportunities, I would say, as aresult of adding more information into the system, in buildings in the transport system, to really continue lifting efficiency.

It seems to me we need to very careful to extrapolate the history of demand growth from the countries like the US to the rest of theworld. There will be some more population growth, but the demand side may surprise people, and I think a lot of what we’ve seenin the last decade, or since 2008 or so globally, has to do with surprises in terms of soft demand for many products, other thaninformation products. I think we just need to be careful about that, and if the demand growth was much more moderate, then ofcourse our ability to do smart things on the supply side, the options grow.

Jan Mueller:

If I could just briefly recap, we’ve been talking about how energy has been important for everything. It’s brought a lot of good to alot of people, and we’re trying to bring it to more people. We’ve wasted a lot of energy, but there’s opportunities to be moreefficient, and how we satisfy the people outside the developed world, for their economic benefit is the big question mark.

We’re going to take a short break. When we come back, we’ll talk about what some of those scenarios might look like. We talkedabout the environmental impacts, but we can also talk about the economic risks and opportunities of the transition. We’ll be rightback.

We’re back, talking about energy transitions with Scott Tinker of the Bureau of Economic Geology at the University of Texas,Steven Koonin with the Center for Urban Science and Progress at New York University, and Jesse Ausubel with the Program forthe Human Environment at The Rockefeller University.

Before the break, we were talking about how demand and how people will use energy in other countries besides the United States,that they may or may not take the same path and demand may not be everything that we project it to be, in terms of continualgrowth and similar expectations. Jesse, you work a lot on looking at things from a behavioral standpoint. Could you elaborate onthat?

Jesse Ausubel:

The shared economy is a phrase we’re all becoming accustomed to, and I think it’s a very interesting one, whether it’s companieslike AirBnB, which mean that maybe we don’t need to build as many new hotels as some of the hotel companies have thought, oragain, car sharing. Maybe we don’t need as many cars.

There’s this broader trend. I’ll put it in an even broader perspective. There are four great resources, natural resources like water andenergy, labor, information, and machines. In the 20th century and before that, the master resources were the natural resources andthe human labor. In the 21st century, I think the master resources are now information and capital, the machines.

There’s a real question. How many workers do we need, and how much oil do we need, or coal? I think the infusion of informationinto agriculture, precision agriculture, into all kinds of systems, into transportation, it’s dramatically affecting the stuff that weneed, the demand side. Steve is the leader of a center which is looking at cities in this way.

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Jan Mueller:

Steve, he teed you up very nicely. Why don’t you talk about what you guys are up to.

Steve Koonin:

Yeah, thanks, Jesse, for the segway. We started four years ago a center at New York University called CUSP, the Center for UrbanScience and Progress, whose goal it is is to use data, big data resources, to fully understand large cities. In the US, 80% of us livein urban areas, and so understanding cities with the goal of improving them is something that should be high on the agenda. Newtechnologies, the digitization of records, machine learning, the proliferation of censures let us understand cities in ways we nevercould before.

Some of our work is concerned with energy, of course, and that’s a very important function in cities, but others are concerned withthe delivery of social services, environmental quality, and so on. With respect to energy, you can substitute information for energy,as Jesse said, whether it’s in the way buildings are operated in order to reduce energy consumption, the way in which they’redesigned. The way in which vehicles are routed is a very important use of information technologies. There is this flowering ofurban science and its applications now going on in the US about how we can use new information to better understand andimprove cities.

Scott Tinker:

It’s interesting too, if you look at this concept of efficiency and at the end of the film, we showed a [trend] line of global demand.What we didn’t talk about was that I had shown less global energy consumption than pretty much anybody who does these thingsin the world, because I think we’re going to continue to build a lot of efficiency into our systems. If you look at that US, we’re onenergy growth trend pre-1973 that was at one slope. If that had continued about half a percent less than GDP growth, we would beconsuming about 180 quads a year, 180 quadrillion BTUs a year of energy today. We are consuming today less than 100.

The US can do much better, but let’s not underplay the amount of efficiency that’s been built into the system already. Along thelines of the kinds of things Steve and Jesse are talking about, but we can do much better, so in developed nations, energy percapita is flat largely, and decreasing in some, and certainly in terms of energy per unit of GDP produced, the ratios are much betterthan they are in developing nations, which I hope we’re correct in saying that they can accelerate themselves towards that.

As the old saying goes, the Stone Age didn’t end for lack of stones, and I think Jesse Ausubel does a very nice job of explainingmost of major global commodities in the world are really not a function of limited supply. What happens is, we start to replacethose with other things when they get too expensive.

On that thought, the oil, the shale oil and shale gas, as the prices come down, there is discussion about, will Saudi Arabia’sactivities leading OPEC cause the shale oil producers to go out of business? Some of them will, some that were high costproducers, but what happens with price fall is, cost comes down, and cost comes down dramatically, so you’re seeing that.

The other thing that happens is technology continues to improve and march along, so that you can extract more resource from a setof rocks than you could five years ago. That dynamic between cost, and price, and technology is very real, and as long as there isdemand for that energy form, we tend to produce it.

It’s really not a limit of supply. It’s really a function of demand, and I think that’s a very important piece of the conversation.

Steve Koonin:

Energy Transitions - Understanding the Challenge - The Energy Xchange

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This is Steve. I want to talk about, just for a minute, the potential for efficiency to reduce demand. It’s very interesting if you lookat energy use of various countries as they develop, and what you see is that in the early stages of development, all countries followan almost universal path of energy use until they get rich enough, up to about $25 or $30,000 GDP per capita. China’s at about thatinflection point, India not really yet there, and a good fraction of the world still to get there. That universal rise of energy withincreasing wealth has got to do with concrete, steel, roads, just building stuff.

Once you get rich enough, then society’s choices about infrastructure, behavior, climate, mix of activities, can lead to relatively lowenergy economies or very high energy economies. Europe, for example, uses half the energy per capita that the US does, but that’sa conscious choices about what the developed state looks like. The real question is going to be, what do China, India, Africa looklike 30 or 40 years from now, after they’ve developed?

Jesse Ausubel:

I think part of the answer to that is in looking at young people around the world today. This past summer I was struck by thenumber of people standing naked on the beach talking into their cell phones. It seems like the world is just heading in that directionwhere what people want to consume is digital. They want images. They want communications. They don’t even care if they have abathing suit or shorts….

Steve, you’re right, that people of course do want basic shelter, and so forth, but it’s the information century, and people … I thinkthe expressed preference of people in recent years is for Facebook, and Apple, and Google. That’s what people are consuming, inthe same way that in 1900 or 1920, people were getting all the extra electricity or all the extra BTUs that they could. In 2016, it’sbytes and bandwidth that people want, and I think that’s true in much of the world.

Again, we need to be very careful not to assume that the rest of the world will live like America.

Steve Koonin:

Right, although to paraphrase I think the Bible, men cannot live by bytes alone.

Jan Mueller:

A modern version of the Bible. Steve, I’d like to get back a little bit to your center, and the urban part of your name. You’re inNew York City. My New York friends like to tell me how low their carbon footprint is just by living in New York City, and therest of the world is urbanizing as well. What we’ve been talking about is how behavior and different lifestyles may naturally, bychoice and necessity perhaps, lead to a lower energy lifestyle, and a lower energy society, but there are also special challenges indealing with energy in an urban environment.

Steve Koonin:

Yeah, so buildings use a significant fraction of the energy in New York City. The construction of the buildings, of course, changesonly on multi-decade scales. The operation of the buildings is a very important factor in determining heat and light. For example,the classic New York scenario is that the building heater’s turned on and the apartment windows are open in order to keep theapartment at a comfortable temperature. That’s an information control problem that can be solved, but there are societal problems,or societal aspects, that make it hard to change those.

For example, there’s what’s called the principle agent disconnect, where I might be a renter of an apartment, and I pay the utilitybills, but the landlord maintains the infrastructure if you like, and has no incentive to improve the infrastructure directly, becauseI’m paying the bills. Another is the risk aversion to investing in more efficient systems, whether it’s because of technology or

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uncertain payback in the future. Frankly, in some cases, it’s just that the small cost of energy is a factor in landlords’ or tenants’thinking.

I’ll give you an example. The numbers I’ll quote are rough, but they illustrate the point. Per square foot of office space inManhattan, the personnel costs, the person occupying the office, are $300 per square foot per year. The rental costs, the buildingcosts, are $30 per square foot per year, and the lighting cost, the energy that it costs to deliver the lighting in that office, is $3 persquare foot per year. If you’re a business person, lighting as an economic driver to improve the efficiency is way down on thebottom of your list.

Scott Tinker:

Steve, I’ll add into that that I speak a lot to power companies these days, and power utilities, and public power producers, and co-ops, and things. The model for their price structures is a big discussion topic. It needs to adapt and change as we become moreefficient, we use less per capita. We begin to share, as Jesse has described. The amount we need drops, and not a great businessmodel when you go to your board each year and say, “Hey. We’re gonna produce less again next year.”

They have to begin to work out, and that’s a combination of governments, and industry, and academics, and NGOs thinking. I callthat the radical middle, not many people there, but thinking together on how to create the kinds of price structures that allowcompanies who provide electrons to still exist, make a profit, in an ever-decreasing world, if you will, in terms of energyconsumption.

Jesse Ausubel:

Yeah, this is a huge issue. Farmers need profitable crops, and it’s been very hard, and in the US, Canada, Europe of course, welive with these enormous subsidies to agriculture in order to maintain the farm economy. Energy has been a very profitableindustry. It’s paid a lot of taxes. It’s supported a lot of the rest of society in that sense.

The question of how to create profitable energy enterprises in the future is a big one, because as Scott says, if there’s really a lot ofdemand destruction, and there are a lot of requirements to behave in certain ways, that means that the revenue to the industry isgoing to have to come through a lot of taxation and subsidies, that the industry won’t be self-supporting.

Steve Koonin:

There is another dynamic as we think about the transition, particularly in traded commodities like oil and increasingly natural gas.If the demand for oil or gas is going down because the world is transitioning away from those fuels, then the prices will drop, andwill make the alternatives less financially attractive. That needs to be managed carefully by regulation, by standards, and as Jessewas just saying, perhaps by subsidies.

Jesse Ausubel:

Of course, one of the real problems is that energy makes people go crazy in some way, in terms of public policy. If we look backon decades and generations of energy policy, there have been a lot of really lunatic ideas, whether it was nuclear powered airplanesin the 1950s, or the Clean Air Act in 1970 had some good aspects, but it also required a certain kind of review of new sources thatled to the super-annuation of very bad old coal power plants. The Carter administration forbid interstate transport of natural gas,and we’ve had this insane ethanol diversion over the last 25 years. On an area of land in the US, the size of Illinois or Iowa, isused as pasture for cars.

The history of public policy with regard to energy is really not good, has at least as many bad ideas and failures, and lots of

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willingness to lie, and distort, so we have to be really careful about invoking public policy.

Scott Tinker:

Jesse, there’s a modern example of that. There’s several, but in Germany particularly, where they have moratory on hydraulicfracturing, and moratory on nuclear, post-Fukushima. As a result, they’re taking physical delivery of coal from our Powder RiverBasin on trains to barges back to trains to Germany, where they mix it with their lignite and burn it. Their C02 emissions in a verygreen-thinking economy have actually increased. I say don’t judge intentions, but please evaluate outcomes, because some of theseideas, although well intended, often fail miserably.

The one thing I want to say about Steve’s point, and it’s an interesting one to think about, as costs come down, yeah, perhapsgovernment thinking and incentives, or a variety of other mechanisms, but another thing to think about is as costs come downbecause of demand destruction for coal, and oil, and natural gas, it means they will last longer. If we could use some of that costdestruction to clean them up further, and they’re actually doing remarkable things already, but they can go further, but they couldafford to have quite a bit of cleanup cost put on them and still be very competitive. If we’re able to accomplish that, theenvironmental goals, is it coal, and oil, and natural gas that are evil, or is their environmental impact?

I think the thing that surprised me most, and I would encourage listeners to take a look at … I got to share the stage last summerwith Stewart Brand, and Stewart is the original environmentalist, the Whole Earth catalogue, and he’s written a book called WholeEarth Discipline. Its subtext is why dense cities, nuclear power, and transgenic crops are necessary, and this has shocked the world,that an environmentalist with his credentials is saying, “Look, the denser we are in cities, the less we use per person, more nature.”Nuclear power, very dense, efficient, high capacity factors, affordable once it’s built. Transgenic crops, et cetera, being able to feedpeople with less land, more nature.

I think a lot of the people who have spent quite a bit of time thinking about this are not trying to necessarily continue with themantra that these things are bad by definition. We got to look at the outcomes we are intending, and if they can be accomplished,let’s accomplish that.

Jesse Ausubel:

As Steve suggested earlier, the cities are great friends of the environment in general. The average New Yorker uses about the sameamount of energy as the average Japanese person. Going back to Jan’s original question about what is the vision of a good energysystem, it may be one with very large, dense, very smart information-rich cities. It isn’t one with each of us having a ranch inTexas with a windmill.

Steve Koonin:

Yes, although, just to counter again, to illustrate the point that energy is a complicated, nuanced business. Everybody thinks theyunderstand it, but actually very few people do. One of the reasons that New York City energy consumption is low is that there isn’tmuch manufacturing anymore in the city, and we bring in a lot of energy, and hence a lot of carbon, by importing goods, orelectricity, into the city from other parts of the country. Good, careful accounting of the energy is a difficult thing to do, but isprobably important as we think about the country as a whole, or the globe as whole.

Scott Tinker:

Another example of well-intended policy, and maybe Paris will counter that, but certainly the first big one, the Kyoto Protocol,post-Kyoto, C02 emissions globally increased. Although the developed nations flattened, and the ones that were participating, andthe developing didn’t participate, and there was a kink, a literal kink, as the C02 emissions increased.

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This is exactly Steve’s point. You can’t blame China for increased C02 emissions. I bet every one of us has a least one thing madein China, or more, and so the demand for products that are affordable and reliable is a global demand. The emissions are a result ofthat. You just can’t export that problem to some other country and wash your hands, and say, “Hey. We’re clean.” In fact, this hasto be solved globally.

Jesse Ausubel:

The information economy requires perfect power. Google or Facebook can’t live with outages, so the system has to be ultra-reliable. If you’re in an airport and trying to get on an airplane using a boarding pass on a cell phone, it’s just no good to say, “Oh,well, the system is down. Come back in an hour.”

Steve Koonin:

Let me come back to Scott’s point about this being a global issue, both in terms of goods, energy, environment at least for climateissues. I often ask people the question, suppose you were in charge of China, and you were the leader. You were subject to all ofthe constraints that the current leader has, the political constraints and so on, but you care deeply about these environmental issues.What would you do? I’ve not had anybody give me a good answer, other than the current trajectory.

Jan Mueller:

Okay. We’re going to take a short break, and I think that’s ultimately the question, and we’ll dive into that in our final segment.We’ll be right back.

We’re back, talking with Jesse Ausubel of the Rockefeller University, Steve Koonin of New York University, and Scott Tinker ofthe University of Texas about energy transitions, what it’s going to take.

Before the break, we were talking about how government does and doesn’t help in many of these cases. We’ll talk more about thefederal role, but we didn’t talk very much about the scale of the challenge and the timeline of the challenge, and I want to give youguys an opportunity to comment. There is the climate timeline that dominates the public discussion, but then there’s the reality ofwhat this going to take, and I’d love to hear your thoughts.

Right now, we’re using in the developed world many times more energy than individuals are in the less developed world. Will webe able to bring them up to our scale of energy use? Will we be going down to their energy scale? Will we be meeting somewherein the middle? Scott, what are your thoughts?

Scott Tinker:

Scale is really the issue, and Jesse mentioned earlier that you see people naked on a beach with a cell phone today, and that ismaybe all they need. If there was no energy, they’d be hungry and naked, without a cell phone. This is the challenge. Energyunderpins everything in the modern world, and the scale of demand, it’s just hard to describe. I’m very optimistic that developingnations are and will continue to come down per capita, and even in the aggregate, and that the developed nations will be able to dothat.

Developing nations and undeveloped will be able to grow to where they need to be and not have to go to the heights that we werein terms of aggregate consumption. It takes energy, however, to do things, so there’s going to be some consumption there.

It’s a huge challenge, and this is I think one of the things that’s probably not well understood, is that there is a need for energythat’s industrial scale, let me say, as well as a greater opportunity for distributed energy. No doubt that we can have solar panels on

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rooftops, and micro wind turbines, and geothermal systems that provide heating and cooling via the heat pump thought to homesand small businesses, et cetera. Particularly in parts of the world where there is very little energy or none today, that would be theway to start.

The challenge, of course, with industrial scale renewable energy, if you want to use that term to describe solar, wind, or evenwaves and tides, perhaps biofuels and even hydro, although many of those aren’t wholly renewable, if you think about rainfall, andyou think about drought, and you think about other things that affect those.

If we’re going to go to scale with those, they remain sources that are not always on, if you will. The sun comes and goes.Something called night, and clouds, and the wind changes as well. You have to have reliability in that system, and that requiresindustrial scale, or base load, or backup systems, if you will. This mix is critical. I think it’s one that we’re getting our headsaround, but there’s still plenty of work to be done. It’s going to vary. The challenge here is it’s going to vary by geography. What Imean by that is, you can’t have, in the US for example, a single solution.

You can’t have a single solution for each state. You may have good wind in the desert southwest, and sun in Texas deserts outwest, and wind in Texas and other places up the central US, whereas you don’t have those resources in other parts of the country,and the same with oil and gas, et cetera. As tempting as it is, these things have to be managed by geographical regions using theresources that you have, so that you don’t have to move the energy too far.

There’s politics in this. Let’s not kid ourselves. If you look at a map of the United States and lay down where these various sourcesof energy are, it’s remarkable that oil, and natural gas, and coal, and wind to some degree, are largely red states, and red counties,and wind, and solar, and other things are blue. I’m not saying that correlation is causation, but I think you got to understand thepolitics that certain forms of current energy tend to vote one way, and others vote a different way, and there’s a need to get votes.You tend to support the voter base that you have, and try to move the systems that way. There’s a political component that weavesits way in and throughout all the physical, supply, and economic issues, and environmental issues we’ve been describing already,and that tends to make it even a little bit more complex.

Jan Mueller:

Politics, obviously, is very important, and it gets a lot of the attention, but you were talking about how on the business side and onthe use side, there are a lot of trends that are very positive. I think the question still is, will it be enough? Does it needacceleration? What can we do to, in a way that makes economic sense, move there as deliberately as possible?

Steve Koonin:

It’s good to look to the science, to understand at least the climate driver. Almost 200 countries met in Paris in December, with thestated goal of stabilizing the climate, and the science behind that says that if you want to stabilize human influences on the climate,not reduce, but just stabilize, we need to go to zero fossil fuels in the next 60 years, globally. Zero. That gives some estimate of thetime scale the transition needs to happen, if you want to protect the climate, as people say.

It also gives some sense of the scale. In the US, for example, we replace, or we add, about 1% of generating capacity every year.Most of those additions in the last years have been in gas, some in wind and solar despite the strong growth in wind and solar.Time scales are not that rapid, and we’re not moving in the right direction fast enough.

Jesse Ausubel:

The sector that most excites me for the next ten to 25 years is mobility. If Henry Ford had lived not only through the Model T andthe Model A, but if he had still been alive in the year 2010, he wouldn’t have been very surprised by the vehicles he saw. He

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might’ve been impressed by windshields that don’t shatter and so forth, but the basic vehicles didn’t change very much for 100years.

Now, for the first time in a century or so, the mechanisms of mobility really seem to be in play. We have fuel cells running onhydrogen. We have claims, not yet really substantiated, but claims of better batteries. There really could be lots of changes, and ofcourse, the market, the really exclusive market, the only market for oil anymore is for cars and mobility, and secondarily foraviation, jet fuel kerosene.

It’s really possible that engines and motors could change a lot, and they could run on compressed natural gas. They could run onhydrogen. The hydrogen could be stripped from methane with the carbon captured and sequestered. It could be manufactured byhigh temperature gas reactors in Idaho, or in China. There’s a whole set of possibilities now. There are a billion cars in the world,so the whole system won’t … Again, it’s going to change a few percent per year, but basically, it’s been a pretty stable …Mobility’s been pretty stable, and in this next period, I would say maybe the area really to watch is what changes in vehicles onland, and maybe in the air as well.

Scott Tinker:

Jesse, interesting on that. A study just came out from Berkeley. It showed electric vehicles, and it was looking at their emissionsrelative to internal combustion engines. It showed that you’ll get a decrease in emissions from vehicles nationwide, and it varies bystate depending on the source of the fuel for charging them. What it also went on to show though, which was the interesting part, isbattery efficiency, and you mentioned there’s claims of better batteries, and I heard Elon Musk speak recently, and he makes thoseclaims very strongly, but he’s motivated to do so, that when they put in the battery efficiency component related to temperature, itturns out there are about ten to 15 northern states that have fuel mixes that are more fossil-based, and cold affects the battery lifeand efficiency, where the actual emissions from the electric vehicles in their system went up compared to combustion engines.

There were a bunch of states where it went down, and some that were sort of mixed. I think this is a classic example of intention,thinking, and then the real consequences out of the back end as you start to deploy it scale, and you got to always keep in mind,just like the Germany example earlier with C02 emissions going up, you have to keep in mind, what is the end goal there as wemake changes from one type of thing to another, to make sure that if it’s an environmental driver, then we got to make sure that itactually happens.

I tend to be a guy that thinks … I may be unique in this, but I actually think markets aren’t dumb. I think markets actually do areasonable, if not slow, job of moving things to where they need to be.

I think the reason Henry Ford wouldn’t be surprised is because his basic design was a pretty darn good one.

Steve Koonin:

Scott, I think you got to be careful. There are other benefits beyond greenhouse gas emissions to electrifying transport, if it can bedone economically. You have the local pollution issues. You have noise. You have a much greater stability of the fuel, electricityprices are much more stable than gasoline prices, and so there may be other benefits. In fact, if you wanted to reduce greenhousegases, transport is not the place you would start. Transport accounts for 20% globally of greenhouse gas emissions related toenergy, and only 14% of total greenhouse gas emissions. Transportation, there are other reasons for wanting to improvetransportation, and I agree with Jesse. Electrification, connectivity, and autonomy are the exciting things going on in vehicles rightnow.

Scott Tinker:

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To kind of play devil’s advocate for a minute, the other thing we’d have to do as we do that, though, is make sure we understandthe amount of mining that would have to go on. We’d kind of shove that over to China as well, for rare earth elements. As they’reweekly disseminated, you have to move lots of tons to get a little bit, and so as you start to build the cations and ions in thesebatteries that are going to be needed at scale, and what you do with the big housings that you can refurbish or re-use. We’re notdisagreeing. When you go to scale with anything, there are benefits, and there are costs. You got to manage all of those as youmake those changes.

Jesse Ausubel:

My personal bet would be on fuel cells rather than the batteries, but my main point, and I was not focusing on the climate issue,but rather trying to think of which sectors of the energy economy might change most rapidly in the next generation or so. I think itis this integration of the car sharing, self-driving cars, changes in propulsion, this whole suite of things where if it’s, let’s say,2040 or 2050, and we’ve looked back today, it may be that the area of mobility is the one … Electric power generation, basicelectric power generation may still be mainly natural gas and nuclear. The executive of today, visiting a plant in 2040 or 2050, it’llbe a bit more efficient and so forth, but maybe not radically different.

The mobility system could shift a lot, and I think the companies, whether it’s Toyota, or Honda, or Uber, and Google, and Apple,that whole area is vibrating.

Steve Koonin:

I agree, Jesse.

Jan Mueller:

In general, there’s a lot of things going on in mobility, in terms of batteries, and fuel cells, and changes in lifestyles, but if you putthat all together, it’s still going to be very difficult to replace the amount of energy that we’re using in transportation now or if wereplicated it elsewhere. It seems it’s hard to avoid getting to the point where we can have all this innovation in those specific areas,but it’s not going to be a replacement of the system, the transportation system, that we have now. Whether it’s an energyconstraint, or a capital constraint, or just a time and human organization constraint, we’re talking about a future of less energy andperhaps fewer cars.

Jesse Ausubel:

But greater mobility. People will have more transport services, while using a reduced amount of natural resources. That’s exactlywhat we want.

Steve Koonin:

I think it depends on circumstances, Jesse. For you and me, you’re exactly right. I might drive a car in New York City once a weekat most. Mostly it’s public transport, and taxis or Uber, but you talk to people who live in Santa Fe and go several times a year ormore to the Bay Area, as one of my friends does. He’ll say, “I can’t do that on an electric car.”

Jesse Ausubel:

Maybe a fuel cell will do it.

Steve Koonin:

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Maybe, or maybe just changes in lifestyle.

Jesse Ausubel:

Yes. Yeah, again, it may be that … Yes. It may be the self-driving fuel cell car which knows exactly where to get its hydrogen andso forth.

Steve Koonin:

Right.

Jan Mueller:

We’re getting close to our end of our time, and as a way of wrapping things up, we’ve talked a lot about the specific areas ofopportunity, and positive trends, as well as nuts still left to crack. Rather than picking the winners and losers, which government oranyone else doesn’t do very well, but it’s just creating the conditions for more innovation, more experimentation, more trial anderror, more companies, and people, and brain power involved in this problem, as well as dollars in terms of investment.

Not every investment’s going to pay off, but we need to make some bets on paving the way to a more sustainable, lower energy,lower impact future that ultimately is as satisfying, if not more satisfying, than what we have today.

I’d love to hear your thoughts on both what the private sector and individual communities can be doing, and feel free to elaborateon what government should and should not be doing in this area. Given a lot of this has to do with behavior, Jesse, why don’t yougo first.

Jesse Ausubel:

More bytes, not more kilowatts. Precision medicine, precision agriculture, precision energy. It’s the infiltration of intelligenceeverywhere in the system, and this is true for India, or China, or New York City. I think that’s the key. I don’t think we need toinvent altogether new forms of propulsion. It’s not a matter of fusion or these kinds of things. I think it’s a matter of reallyinformaticizing the energy sector in the same way we’re trying to do that with agriculture, and with medicine and many othersectors.

Jan Mueller:

Well said. Steve, what are your thoughts?

Steve Koonin:

Let me first give a government informed perspective, and then turn to the private sector. The government is the principle agent ofenergy innovation at the very beginning of the innovation chain. It does the basic science, and the materials. Biosciences might beappropriate for biofuels, and some of the underlying technologies for the informatics that Jesse was mentioning. However, it canonly go so far.

One of the things we talk about is the valley of death between the development of a technology and its demonstration at scale. Weneed more of that. Scott knows this from direct experience, carbon capture and storage plan is one or more billion dollars todemonstrate at full scale, and the government needs to be able to make that happen, either through its own funding, or co-sharingwith the private sector.

More research at the head end, and then the ability to do large scale demonstrations, and FAIL as appropriate at the demonstration

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end. In the private sector, the companies respond to economics and regulation. I like to say they’re almost like sharks–economicsregulation, that’s all they do, and you need to have a predictable regulatory environment. Yesterday’s Supreme Court stay on theClean Power Plan is an example of the kind of instability in regulation that is plaguing the system right now.

The second thing is the ability to make money. Unless things are arranged so that a company can make money by providing energyservices, whether it’s supply, or demand, or both, it’s just not going to happen.

Jan Mueller:

Scott?

Scott Tinker:

Yeah, and for me, it’s education. Two little girls came up to us at the high school soccer game. They were probably fifth grade. Wethought we were going to be buying some Girl Scout cookies last week, and one had a little notepad, and she said, “You’re theSwitch guy,” and she wanted my autograph, so I reminded my wife how famous I am.

The irony of all that is, her whole fifth grade class was watching Switch. I got an email just yesterday from a high school teacherin Highlands Park, Colorado, and they had done a whole unit around Switch. I’m not pitching Switch, but what they are doing isstarting to educate themselves about energy, and they’re using energy in their STEM classes now. We have a woefullyundereducated public, even in our developed nations, with regard to energy. We simply don’t understand it, and what it provides,and what it takes to do that.

I feel I completely agree with both Jesse and Steve, and I just say that the better educated the public becomes, the more likely thesethings are to happen in way that makes good sense.

Jan Mueller:

Okay, and I applaud those efforts, and that is, in essence, what we’re trying to do here with The Energy Exchange in our smallway. I very much appreciate you contributing to that effort today.

[End]

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